Question

27. The following data (in thousands of dollars) have been taken from the accounting records of Rayburn Corporation for the current year.

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Sales	$1,980
Selling expenses	280
Manufacturing overhead	460
Direct labor	400
Administrative expenses	300
Purchases of direct materials	240
Finished goods inventory, beginning	240
Finished goods inventory, ending	320
Direct materials inventory, beginning	80
Direct materials inventory, ending	140
Work in process inventory, beginning	140
Work in process inventory, ending	100

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Required:

a. What was the cost of the direct materials used in production during the year?
b. What was the cost of goods manufactured for the year?
c. What was the cost of goods sold for the year?
d. What was the net income for the year?

Present all calculations in thousands of dollars.

Answer 1

a.	Cost of direct materials used:
					$
	Direct materials inventory,beginning				80
	Purchase of direct materials				240
	Total direct materials available				320
	Less: Direct materials inventory,ending				140
	Cost of direct materials used				180
b.	Cost of goods manufactured:
					$
	Cost of direct materials used				180
	Direct labor				400
	Manufacturing overhead				460
	Total manufacturing cost				1040
	Add:Work in process inventory,beginning				140
	Total work in process				1180
	Less:Work in process inventory,ending				100
	Cost of goods manufactured				1080
c.	Cost of goods sold:
					$
	Cost of goods manufactured				1080
	Add:Finished goods inventory,beginning				240
	Cost of goods available for sale				1320
	Less:Finished goods inventory,ending				320
	Cost of goods sold				1000
d.	Net income:
					$	$
	Sales					1980
	Less:
	Cost of goods sold				1000
	Selling expenses				280
	Administrative expenses				300	1580
	Net income					400
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